Operating a business frequently means becoming involved in business disputes that escalate into legal matters. Legal battles can become long, drawn-out affairs that end up costing large sums of money. In addition to the cost, legal battles over business disputes take away time and attention of a business’s leaders. While those leaders certainly don’t stop paying attention to the needs of the business, they can find themselves with less time to attend to their business simply because of the time and attention a legal dispute can require. This is particularly true for small businesses, where there might be only one or two people responsible for making business decisions.
In general, ADR involves using an impartial third party to help parties reach a settlement of a legal dispute without resorting to the state court system. In Texas, ADR refers to a procedure established by legislation in 1987 and enhanced in 1996 that includes nonbinding settlement procedures conducted before a neutral third party. Written settlement agreements reached in ADR proceedings, however, can be enforced as contracts. ADR proceedings also can include court-ordered arbitration with binding results.
Alternative Dispute Resolution is a Formal Structure That Avoids the Court System
Alternative dispute resolution is intended to increase participation in the legal system, as well as increase satisfaction with the legal system, provide another forum to make dispute resolution easily accessible and fair without resorting to the courts, reduce the cost and delays of court litigation, and to reduce the burden on courts. The settlement procedures of ADR are voluntary, but courts have the statutory authority to refer a case to ADR, either on their own or upon a motion by either party to the litigation.
Since 1996, Texas has had legislation that strongly encourages the use of the state’s Alternative Dispute Resolution system, known as ADR. The enabling legislation that set up the Texas ADR system officially endorses the use of ADR to resolve all public disputes, including business disputes. The primary statute establishing ADR in Texas explicitly provides legal authorization of ADR and encourages the use of ADR. The law provides that it is official Texas state policy that businesses and other entities should use ADR to resolve legal disputes. The statute allows administrative law judges to conduct ADR proceedings, and also allows them to refer contested disputes to ADR.
Texas ADR legislation officially establishes that:
- It is Texas state policy is to encourage resolution of disputes and litigation using voluntary settlement procedures outside of the court system;
- Courts are allowed to refer cases to ADR through a dispute resolution organization or any other venue providing voluntary settlement of disputes using an impartial third party, and
- A written settlement reached in ADR is enforceable in the same way as any written contract
ADR is a process outside of the courts, but it remains a legal resolution of a dispute. If you are involved in an ADR proceeding or contemplating one, you should give strong consideration to seeking legal advice.
If Your Business Is Involved in a Dispute, Consult a Houston Business Lawyer
If your business is involved in a legal dispute, you should consult with a business attorney to explore options for resolving that dispute without resorting to court action. The lawyers of Weisblatt Law Firm, LLC, can help. Weisblatt Law Firm routinely represents clients who are involved in business disputes and can help you with yours. Contact us at (713) 352-0847, or through our online contact form.